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How The Fed's Latest QE Is Just Another European Bailout

Tyler Durden's picture


Back in June 2011 Zero Hedge broke a very troubling story: virtually all the reserves that had been created as a result of the Fed's QE2, some $600 billion (which two years ago seemed like a lot of money) which was supposed to force banks to create loans and stimulate the US (not European) economy, ended up becoming cash at what the Fed classifies as "foreign-related institutions in the US" (or "foreign banks" as used in this article) on its weekly update of commercial banks operating in the US, or said simply, European banks.

And while many, primarily the British press, demonstrated how simple it is to confuse cause and effect, and suggested, incorrectly, that the surge in cash was due to arbing the Fed's IOER (it wasn't, as otherwise all excess reserves would have migrated to European banks due to the open-ended arbitrage instead of merely tracking the ebb and flow of the Fed's reserves), what we showed was that there a one to one correlation between the surge in foreign bank cash assets courtesy of the Fed, and the EURUSD exchange rate, a proxy for European stability, not to mention a key signal for virtually every ES correlation algo.

As the chart above shows, there was a clear and definite correlation, if not causation, between the $500 billion that the Fed added as cash to European foreign banks, and the nearly 2000 pip move in the EURUSD, at which point everyone was pronouncing the European crisis over. It also resulted in a wholesale surge in risk assets. Just like now (incidentally, a topic we covered last night).

So with the Fed's open-ended QE in place for over 3 months now, or long enough for the nearly $200 billion in MBS already purchased to begin settling on Bernanke's balance sheet, we decided to check if, just like during QE2, the Fed was merely funding European banks' US-based subsidiaries with massive cash, which would then proceed to use said fungible cash to indicate an "all clear" courtesy of Bernanke's easy money. Just like in 2011.

The answer, to our complete lack of surprise, is a resounding yes.

* * *

First, some basics.

While there is much theoretical confusion over what excess reserves are, which are merely the fungible cash-equivalent liabilities created on the Fed's balance sheet whenever Ben Bernanke has to monetize the US deficit by purchasing Treasurys or MBS, and thus needs to create offsetting money-equivalent liabilities, especially by academics whose only job day and night is to debate endlessly just what constitutes "money" as their value added in any other field is negative, from a practical standpoint the answer is and has always been one and the same. Cash.

And because there is always confusion on this matter, especially by the monetary intelligentsia-cum-philosopshers club, here is the evidence. Excess reserves = bank cash. Bank cash = excess reserves.

In the chart above, the black line is the surge in Fed excess reserves since September 2009 (source: St Louis Fed), while the shaded area chart shows the break down of bank cash between small domestic, large domestic commercial banks and foreign banks (source: H.8). The two are identical.

So that should remove any of the the confusion of where the the Fed's main de novo created liability ends up as an asset on commercial banks operating in the US - both domestically-chartered and foreign ones.

But the focus of this post is the foreign banks. And it is foreign banks that have seen their cash soar by some $207 billion in the past four weeks (and $216 billion using not seasonally adjusted numbers). This is the second highest monthly surge into "foreign-related" institutions since the bailout of AIG, and is even more on a running 4-week basis than the maximum $171 billion posted in the spring of 2011 when the Fed was injecting some $500 billion into foreign banks as well.

Another exhibit showing just how generous the Fed has been to foreign bank is a chart of cash compare to all non-cash assets. After nearly hitting 100% as a result of QE2, the ratio has once again soared from 60% to just over 80% in the span of four weeks, or since the settlement of MBS monetizations started hitting the Fed's balance sheet.

Perhaps all of this soaring cash is merely the result of a massive inflow of deposits (a liability) into foreign banks without a matching increase in loans (the much discussed previously excess deposits over loans topic), which only leaves cash? The answer is no, as excess deposits over loans at foreign banks has kept flat over the past year, at between $200 and $300 billion.

And in case the big picture is still not obvious, here is the chart that ties it all together: a comparison of the spike in Fed excess reserves and the cash held by foreign banks. Thank you open-ended QE, and Fed Chairman, for injecting over $200 billion in US Dollars into foreign banks operating on US soil.

What is interesting about the chart above is that while cash and small domestic banks has barely budged since 2009 and has been flat at just over $200 billion, and that cash at Large US Domestic banks, or those that hold the bulk of US financial assets, has also been relatively flat in the $500-600 billion area, it is the foreign banks that any new incremental reserves created by the Fed always inevitably end up at ever since QE2.

As shown above, cash held by foreign-related branches operating in the US has surpassed that of domestic banks only for the fourth time in history, the first being the end of QE2 when Europe was again "fixed" (just before it broke), the second was just before the coordinated central bank bailout of Europe in November 2011, the third was May 2012 just before Spanish spreads soared to record highs, and now.

With all of the above, anyone who was wondering where all those hundreds of billions in Fed cash created out of thin air were going now knows the answer: straight into the coffers of mostly European banks operating in the US.

* * *

The only answer that is still missing is precisely what these foreign banks are using said cash for. Because remember that as JPM's CIO showed, a bank can "indicate" it has cash on its books, when in reality it is using said fungible asset for anything: funding one's prop operations, including selling IG9 CDS in a borderline illegal attempt to corner the entire corporate bond market. Or it can perhaps buy the USDJPY, in the process sending the Nikkei soaring and "indicating" that Abe's reflation plan is working. Or it can simply buy the EURUSD as it did in the spring of 2011, crushing the USD and sending the S&P500 soaring, as can be seen on the chart below showing the correlation between the cash on foreign banks and the recent surge in EURUSD.

And while we are confident that the "British press", which is now reliant on Wall Street banks to help it find the highest bidder to which it can sell itself, will promptly come up with contrarian theories all of which will be wrong as they were in 2011, the reality is simple, and can easily be tracked in real time.

We urge readers to check the weekly status of the H.8 when it comes out every Friday night, and specifically line item 25 on page 18, as we have a sinking feeling that as the Fed creates $85 billion in reserves every month to offset its other key task - the ongoing monetization of the US deficit, it will do just one thing: hand the cash right over straight to still hopelessly insolvent European banks to push the EURUSD higher, until, as in the summer of 2011 it goes far too high, crushes German, and any other net European exports, and precipitates yet another wholesale bailout of Europe by the global central bankers. Just as the Fed did in 2011.

Because remember: it is never different this time.


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Sun, 02/03/2013 - 03:52 | 3210561 Skateboarder
Skateboarder's picture

Wondrous tune for your Saturday night:

Sun, 02/03/2013 - 08:30 | 3210669 smart girl
smart girl's picture

Thank you Skateboarder, you are cool.  Almost saw Judas Priest in my teens; had tickets but my girfriend bailed out (no pun intended big banks) and I did not go want to go alone. What a tight band they are/were? More of a guy thing.. I shifted to other genres because I can identify and relate too much, it seems this type of music inspires my hate for those who have destroyed the natural world and I'm vunerable to drinking/drug use. This band and others pinpoint the lies and untruth with amazing acoustics, yet that is what you get focused on; the lies and untruth rather than focusing on what you do want. Love, Peace, and Understanding. A New Way; an Evolved Way.

Sun, 02/03/2013 - 03:23 | 3210545 smart girl
smart girl's picture

We could also have a worldwide awakening, entering a Spiritual Golden Age, where truth will be self evident and everyone will naturally do what is best for all. Love feels so Good.

Sat, 02/02/2013 - 22:53 | 3210241 holdbuysell
holdbuysell's picture

Looking for some help on explaining the mechanics of QE. Here's what I understand:

US Gov auctions debt. PD's and others give US Gov cash for the debt. The Fed creates money and buys bonds from PD's, placing newly printed money in excess reserves.

My question is that newly created money effectively went to the US Gov to cover fund the deficit, so how does it provide extra net cash to the PDs? Seems they were simply reimbursed for said printed cash that went to the US gov.

I thought I understood this, and now I'm brain cramping on the concept.

Sun, 02/03/2013 - 01:55 | 3210436 socalbeach
socalbeach's picture

You've basically got it right,

"US Gov auctions debt. PD's and others give US Gov cash for the debt. The Fed creates money and buys bonds from PD's, placing newly printed money in excess reserves."

The newly printed money initially goes back to the PDs, since the Fed buys the bonds from the PDs.  And it also would increase excess reserves since,

Excess reserves = bank reserves - customerDeposits/10 (with a reserve ratio of 10).

So excess reserves increase 1-1 with Fed money printing, as long as all of the reserves they create stay in the US banking system, and customer deposits don't increase.  If either of those conditions aren't true, excess reserves would increase, just not as much. Simplified examples:

(a) if the Fed creates a dollar, and it stays in the US banking system, bank reserves increase by a dollar, excess reserves increase by a dollar,

(b) if the Fed creates a dollar and 40 cents leaves the US banking system, excess reserves increase by 60 cents,

(c) if (a) and 90 cents of that dollar is loaned out, customer deposits increase by 90 cents, so excess reserves would increase by only 91 cents (1 - 0.9/10).

Sun, 02/03/2013 - 02:51 | 3210514 socalbeach
socalbeach's picture

To address the 2nd point you raised, you could also argue that the newly printed money goes to the recipients of government spending, since the US gov spends all the money it receives. 

As to whether any newly created money went to the PDs after all is said and done, one way to answer that would be to ask what % of the bonds that the PDs originally buy from the Treasury would be retained with and without QE.  Let's say they would have retained 50% of the bonds with no QE, and 15% with QE.  Then their cash position would increase by 35% of Treasury issuance over what it would have been with no QE.  I have no idea what the actual numbers are however.

Sun, 02/03/2013 - 17:29 | 3211665 paulbain
paulbain's picture





       Thank you for your explanations. I, too, was a bit confused on some of the details, especially how the FRBank's purchases of T-Bonds (from the PD's) increases the ER's of the Primary Dealers (PD's).

-- Paul D. Bain




Sat, 02/02/2013 - 23:27 | 3210287 gmcniff
gmcniff's picture

I have a top-five MBA and worked at two BB IBs and never encounted an analysis as thoughtful and thorough as this one.


Question on the following sentence: This is the second highest monthly surge into "foreign-related" institutions since the bailout of AIG, and is even less on a running 4-week basis than the maximum $171 billion posted in the spring of 2011 when the Fed was injecting some $500 billion into foreign banks as well.

What is "even less on a running 4-week basis"?  The amount of the surge of the absolute amount in foreign reserves?  Sorry if I'm slow here.

BTW...Isn't it scary none of the MSM can connect the dots here (or don't want to)?


Sun, 02/03/2013 - 00:42 | 3210403 gwar5
gwar5's picture

ZH is like looking over the Bernank's shoulder.

Sun, 02/03/2013 - 01:54 | 3210463 RockyRacoon
RockyRacoon's picture

You're the one with all the wallpaper.  You tell us.

Sun, 02/03/2013 - 02:27 | 3210494 socalbeach
socalbeach's picture

The article (now) says,

"This is the second highest monthly surge into "foreign-related" institutions since the bailout of AIG, and is even more on a running 4-week basis than the maximum $171 billion posted in the spring of 2011 when the Fed was injecting some $500 billion into foreign banks as well."

So I think he means the 4 week change in NSA "Cash assets", page 20, line 25.  The 4 week change using the last data point is exactly 215.9 b (917.8b - 701.9b).

Sun, 02/03/2013 - 03:28 | 3210547 Skateboarder
Skateboarder's picture

I don't have an MBA, but I've taken enough MBA classes to know that they try to manufacture standardized thought in you and me. Fuck that, I resisted it all and looked at the info from each class objectively. Made me sick, the kind of corporate horseshit they try to force-feed you. Even the best teachers were mediocre humans! What gives!

So yeah, when TD puts out an article that says booyah bitch, here's what's happenin, that shouldn't surprise you because TD is telling the truth and that's what real journalism is supposed to be about. If there aint anyone to tell the truth, there aint no truth. Any surprise you feel has been manufactured into you and you should puke it out before it becomes poimanent. The rest of the MBA cocksuckers drank the koolaid. Let em piss on themselves and melt each other with denial...

Sat, 02/02/2013 - 23:31 | 3210304 blindman
blindman's picture

"....It was this money-creating process that prompted Wright Patman, Chairman of the House Banking and Currency Committee in the 1960s, to call the Federal Reserve “a total money-making machine.” He wrote:

“When the Federal Reserve writes a check for a government bond it does exactly what any bank does, it creates money, it created money purely and simply by writing a check.”
" ..e.b.
Who Owns The Federal Reserve?
The Fed is privately owned. Its shareholders are private banks
By Ellen Brown
Global Research, January 29, 2013

Sat, 02/02/2013 - 23:34 | 3210309 blindman
blindman's picture

bailout = redistribution. and we thought there were
laws protecting the innocent and in the name of
justice, silly us.

Sat, 02/02/2013 - 23:36 | 3210316 blindman
blindman's picture

“Some people think that the Federal Reserve Banks are United States Government institutions. They are private monopolies which prey upon the people of these United States for the benefit of themselves and their foreign customers; foreign and domestic speculators and swindlers; and rich and predatory money lenders.”

– The Honorable Louis McFadden, Chairman of the House Banking and Currency Committee in the 1930s

Sun, 02/03/2013 - 00:06 | 3210340 Aquarius
Aquarius's picture

What event shall cause the next, final collapse (this time)?:

It has struck me upon my waking at 0430 hours this beautifully chilly early morn, that the coming Global Collapse event will be caused by those TBTF, most active (and fraudulent) Investment (sic) Banker Groups, such as Hedge Funds, Goldman Sacks, JPM, BoA, Citi, etc., (ad nauseum) and not by the general financial community at large. IOW, the most switched on, resource rich, highly active and 24/7 savvy groups and not the Pension Fund, asleep at the wheel, types.

Those we adoringly admire as the highest and wealthiest elites will pull the Plug, and not the kowtow'ing Bernanke types.


These TBTF groups that are onto and into the Risk factors as a matter of life and death; those that are sucking the blood of humanity trading (betting) in whatever, and are actively engaged in influence peddling, Interest rate manipulation, HFT and all sorts of high risk ventures, of really no interest to the man in the street.   These people that are highly engaged in making Risk assessments and have the huge resources at play. These guys today depend on their losses being picked up by governments ("or else we'll crash the economy") and 'clear fell' all assets classes, wealth and capital for theemselves alone, while remaining non productive and contributioning nothing to the socio-economic growth of global humanity, aux contraire. IMO, it will be these persons, who, upon realizing that, at some point in time, all is lost, that there is no point, there is no certainty left in the markets and that the political will is so  violently corrupt; these people will, almost collectively and instantaneously, pull their investments, bets, and resources from the market places and emplant themselves and their collective resources in safe harbours and waters, and where they cannot be touched and beyond the reach of those left to pay the bill. I am convinced that this scenario has already being planned.
In other words, it will not be the general pension funds, and smaller investors / players that collapse the system; or the system itself. These financial component groupings will also be left high and dry; to collapse, en masse, This will result in the whole system falling exactly like those towers of 9/11 fame; while those  more dynamic members, leave the fray unscathed, and thus dedicate to the World of humanity, a screaming pit of hurt, pain and chaos.
I read once, regarding the fall of Rome, that the evening parties of the wealthy and influential, the celebrations of great pleasures, continued every day and night until that time when the revelers woke, to yet another morning with headaches abound,  but only to find, that this time, the shady ones; those of the  largest money and wealth assets, had disappeared overnight to places unknown, but together with their Gold and other movable assets. 
Rome burned.  IOW Crime pays. But the collpase will not be triggered by the meek, but by the most influential and wealthy; those that created the current milieu. And,one must add, all Economists are fuckwits. I generalize. Ho hum


Sun, 02/03/2013 - 00:26 | 3210364 newengland
newengland's picture

You are generally correct ;-) in my opinion, and so the world turns, as it ever did.

Sun, 02/03/2013 - 01:58 | 3210469 RockyRacoon
RockyRacoon's picture

You're saying that Atlas will shrug.  But in this case he's a banker/financial/Wall Street crook.  Ho hum, indeed.

Sun, 02/03/2013 - 10:12 | 3210742 hooligan2009
hooligan2009's picture

can certainly leanr a lot from the classics...check out alcibiades and how he flitted from athens to sparta and back, and how he was caught inside athens when it became besieged and eventually destroyed by spratans. Alcibiades was a greek hero yet he participated in the orgies before the fall of athens after a long siege by the spartans (supported by persian money).

the psychology in the besieged athens was that people knew they were going to lose everything (inevitable sack of athens) including their lives. All societal "norms" broke down. you could steal anything, rape anyone, murder anyone and it simply did not matter because you would still be hungry and, probably, dead, in short order.

the besieging force in modern times is no less hostile...the reality is that global resources are limited whilst the world population is growing fast.

the provision and insurance of credit to individuals. companies and governments merely accelerates the consumption of limited resources and, as such, parralels the behavior of citizens in a besieged Athens.

still, the spartans did not last either and other greeks had their revenge a few years later. perhaps aging populations and chinese birth control will overcome indian illiteracy and improving health.

Sun, 02/03/2013 - 00:24 | 3210377 topspinslicer
topspinslicer's picture

Perhaps it's not QE at all -- maybe it's just The Marshall Plan to infinity

Sun, 02/03/2013 - 00:28 | 3210384 newengland
newengland's picture

The central bankers plan: bail out themselves with the money and labor of everyone else, with their pretty political pets giving them cover.

Sun, 02/03/2013 - 00:30 | 3210386 opencircle
opencircle's picture

Over my head.

Does this mean Fed is buying treasuries and Mbs from foreign dealers only? So where did dealers get this cash from initially to buy bonds from the treasury?

Sun, 02/03/2013 - 00:38 | 3210398 newengland
newengland's picture

The Fed is printing money* and using devices to send it to its fellow central banks in Europe and elsewhere.

*digital 0 1

You know it's not paper, literally.

Sun, 02/03/2013 - 00:30 | 3210389 thismarketisrigged
thismarketisrigged's picture

i really want to short the fuck out of this market, bc although it may go a bit higher, the end is inevitable with a monumental collapse. and a chance to make lots of money. just do not know when to short it.

Sun, 02/03/2013 - 00:34 | 3210395 newengland
newengland's picture

Patience pays most in a rigged market. Wait. Do nothing now. Otherwise, you will lose big time. Wait.

Sun, 02/03/2013 - 01:00 | 3210418 gwar5
gwar5's picture

Mus t make  Merkel and Draghi happy.

Really exposes Geithner's fraudulent frustration with ECB for not printing like he wanted. He really told them not to bother, he was happy to do it for them. 


Sun, 02/03/2013 - 01:38 | 3210450 Just Ice
Just Ice's picture

But, but, but...The Bernank sat right there in front of congress and said Europe was a rich country and had the resources to solve its own problems.  He said we weren't bailing Europe or European Banks out.  He wouldn't rip off the American taxpayers and flat out lie to the oversight committee about it would he?  Nah, not The Bernank!  Ya know, a middleman sitting in as a link of the chain does not factually change where the flow of the chain leads.  This was about as honest as The Bernank's claim of not monetizing debt (a purely technical sophistry since primary dealers sit as middlemen between treasury issue and fed purchase -- that they collect vig and capital gains while doing so adds to end cost, to be borne by taxpayers, but does not alter the end result of monetization).

Sun, 02/03/2013 - 01:55 | 3210466 Lost Wages
Lost Wages's picture

Bankers without borders.

Sun, 02/03/2013 - 02:00 | 3210471 RockyRacoon
RockyRacoon's picture

...or morals.  Actually, it's downright un-American!  Traitorous scum.

Sun, 02/03/2013 - 02:59 | 3210522 resurger
resurger's picture

The same fucking "modus operandi" but now with European bank's ..


Inflate & Rinse





Sun, 02/03/2013 - 03:42 | 3210556 newworldorder
newworldorder's picture

It appears that the FED has decided that it is now the quasi Central Bank for the largest countries including Europe. Whether they decided this on their own or by interpreting their Charter; questions need to be asked of our three branches of government.


- Is the Executive Branch aware of this and have they also authorized the FED to act in this manner.


- Has the Legislative branch (both Senate and House,) authorized the FED to act in this manner. If not, where are the hearings to find out what is going on?


- Is this Constitutional?


If the FED is acting within its Charter and in a Constitutional manner a different question arises.

The US spends a great deal of money to keep commerce and oil flowing to all the economies of the world.

Would it not now be prudent to ask the other large economies in the world, - Europe, China, India, Japan, Swiss, Brazil and the Asian Tigers - to contribute to the defense of the world by funding a portion of the US Defense budget?

Other than the US having its currency as the "reserve" currency, they contribute very little to world defense. Were in not for the US Military commerce and oil would not flow.


Any chance we will see some action on these issues in the near future?

Sun, 02/03/2013 - 03:54 | 3210560 jack stephan
jack stephan's picture

Cotton king is alive and well these way or another the population exploded I'm sure there is more than a few.

Have a Catalina wine mixer weekend all.

Sun, 02/03/2013 - 03:58 | 3210563 are we there yet
are we there yet's picture

Foreign gold held by the Fed is likely pledged in secret to partially cover the dollars to foreign banks. That would explain the extreme slowness of returning Germanie's gold. This is one of the tools that are used to hide the fragility of the interwoven economic and political forces.

Sun, 02/03/2013 - 04:35 | 3210568 Cosimo de Medici
Cosimo de Medici's picture

In a way is Bernanke saying something like "I'm sorry all our banks sold you this MBS crap back in the early '00s, so what if I buy them all back at a premium?  Will that help you cover the miserable loans you made in Greece, Spain and Italy?

Also, does this suggest that US banks have largely recapitalized and gotten rid of the lion's share of their own toxic waste?  That seems hard to believe, but the numbers sort of imply that.

It stands to reason Eurobanks would be worse off.  They are more levered than US banks (upwards of 40:1 vs 10:1 for most US majors), and the assets they hold are a multiple of EU GDP (~400-500%), while the big banks in the US hold only 65-70% of US GDP in assets.

Super article, by the way.  Too bad it's not an election year, because it will be tough to motivate any Rep or Senator to ask pointed questions during the next Humphrey-Hawkins.  Maybe Rep Issa?

Sun, 02/03/2013 - 13:48 | 3211130 Orly
Orly's picture

Dr. Bernanke making amends for B.J. Clinton and Greenspan's messes?

It's possible.

Maybe it went too far and now he's in the quandary of saying, "Snap!  That wasn't s'poseta happen!"

I would opt for the latter and it doesn't appear that this train is going to stop any time soon.  Japan is toast.  Europe is next unless the geniuses can get their paper houses in order.

The next two years are going to be something to behold, I know that much.

Sun, 02/03/2013 - 07:24 | 3210638 Inthemix96
Inthemix96's picture

The sane rational person in me says and thinks this is treason against the American population at large.

And then to think that the CB's around the world are all privately owned makes one think thats not possible for treasonous activities to take place is it?

And then a few years ago the war criminal tony "Snake Oil" B.Liar changed the British definition of treason and dis-allowed hanging as an offence for said practices, it got me to thinking then that summit fishy was going down?

Do you think this lot of supranational criminals knows something we dont gang?

Sun, 02/03/2013 - 07:57 | 3210651 falak pema
falak pema's picture

The gist of this article clearly indicates that the FED is protecting itself by protecting ITS periphery of private banking stress; aka the private banks of Eurozone. 

Just like the Euro core protects ITS banking sector by bailing out the Club Med periphery...

Concentric circles of mega private banking stress, whose epicenter IS the FED/WS financial construct; with City as historical relay since Euro-petrodollar days.

Sun, 02/03/2013 - 08:20 | 3210661 blindman
blindman's picture

" ..From Stanford Magazine:

“Well, Brooksley, I guess you and I will never agree about fraud,” Born, in a recent interview, remembers Greenspan saying.

“What is there not to agree on?” Born says she replied.

“Well, you probably will always believe there should be laws against fraud, and I don’t think there is any need for a law against fraud,” she recalls. Greenspan, Born says, believed the market would take care of itself." ..
Bankster Alan Greenspan admits scam and fraud......
Melanie Safka - Look What They've Done To My Song Ma

Sun, 02/03/2013 - 12:21 | 3210914 El Hosel
El Hosel's picture

... Alan was right we don't need laws against fraud. Everybody can see that the Fraudsters are above the law anyway. See "The Honorable" John Corzine for starters. The lawmakers are the Fraud.

Sun, 02/03/2013 - 12:49 | 3210996 blindman
blindman's picture

you may be correct but there are greater crimes than fraud
being committed everyday and going ignored. the other thing
that is problematic is if you say the "lawmakers are the fraud"
then it would be reasonable to conclude that the law itself is
fraudulent which creates the problem of defining fraud since
it's definition and description in law is of questionable integrity.
if you cannot reliably define fraud you cannot consider it or use
the word in any meaningful way, which is the point. it becomes
impossible to be guilty of the crime which has no description.
the statement debases the meaning of the word law, or maybe the
term is passe, could read "the fraud makers are the fraud" or
the fraud makers have hijacked and bought the law and turned
everyone into a criminal, except themselves. or is it serf?
serfs of the fraudsters, by law.

Sun, 02/03/2013 - 08:53 | 3210684 shovelhead
shovelhead's picture

If it helps, you can always look at Euro-Bail as your European vacation without the bother of being groped by the Transport Sodomy Agency.

We should, at the very least, get some very nice postcards to show our friends.

You enviromental types can look at it as a remediation fund to clean up our banksters overseas toxic sludge dumps.

Obama Inc.'s 'shovel ready' jobs program for US taxpayers.

Sun, 02/03/2013 - 09:01 | 3210691 Der Hund
Der Hund's picture

would just note on the "British Press" that though Tyler refers to the FT (which Pearson is flogging) the actual journo Tracy Alloway is not British but American...educated in Japan.  Anyways no point slagging here - she is very good - as she was refering to RBC...which I believe is from a place also across the pond

Sun, 02/03/2013 - 09:14 | 3210699 falak pema
falak pema's picture

OT / ABOUT MICE AND MEN. Or how their destinies unfold. 

Yesterday Putin celebrated the 70 th aniversary of the victory of battle of Stalingrad. A great movie made on that subject "Enemy at the Gates", with Jude LAw and Eh Harris, portrays a shoot out in Stalingrad beween a top soviet sniper; based on a true historical character Vassili ZAitsev, hero of the nation and decorated as such afterwards, and a fictitious Nazi sharpshooter Major König, played by Harris. 

Stalingrad (2001) - IMDb

Great war movie.

Its story now finds a poignant aftermath in the death of Navy seal TOP sharpshooter at a shooting range in Texas; Chris Kyle. 

Chris Kyle Killed At A Texas Gun Range - Business Insider

SOmehow the USA has an internal problem with the image of  its war heroes; engaged in wars that are NOT EXACTLY "great patriotic wars" as fought truly by Zaitsev...who lived happily for many years after his true feats, with all his medals. 

Sun, 02/03/2013 - 09:40 | 3210723 hooligan2009
hooligan2009's picture

saw the Chris Kyle killing. He had loads of medals and had claimed 160 kills himself and was shot by a 25 year old who has been arrested? Wtf? 

Sun, 02/03/2013 - 13:32 | 3211084 Benjamin Glutton
Benjamin Glutton's picture

can't have the most dangerous man in the country roaming free?


the shooter is described as an X marine with ptsd...heh

Sun, 02/03/2013 - 13:51 | 3211139 Orly
Orly's picture

Same as Gabby Giffords took a sidelong glance at the assassination of a judge?


Sun, 02/03/2013 - 21:48 | 3212126 Cathartes Aura
Cathartes Aura's picture

from the Biznest Insider link'd,

On that day each of these factors conspired together and Kyle hit the man before he attacked the convoy. “God blew that bullet and hit him,” he told The Post.

what goes around. . .

Sun, 02/03/2013 - 11:11 | 3210730 hooligan2009
hooligan2009's picture

keep in mind that "foreign" banks might also include subsidiaries of US banks operating in London...just saying.

it is interesting that "only" 200 billion dollars can move the currency pair 20 big figures, especially in the context of the relative size of US and european QE's over the period.

i have the view that the flowing of funds to non-US domestic banks is a natural corrollary of the US being in so much debt as a result of not paying its own way and bludging off other coutnries in order to fund its obese consumption profligacy.

that is, the US is a debtor nation and cannot fund its own balance sheet. ergo, when the Fed buys assets, it is almost certain these assets are held by foreigners.

i also have the view that MBS are less risky than Goverment debt, since the MBS are actually secured (mostly) on real assets owned by real people. Government debt, however, represents the cumulative excesses of successive mobocracies and is secured on nothing.

repudiation of Government debt on a global basis is a heartbeat away, since mobocracy combned with the financial incompetence of elected officials, the continued use of fiscal deficits makes the creation of all government debt "odious debt", by definition.

people are conditioned to pay back mortgages, work and pay taxes and, as such, mortgage debt stands a much higher chance of being repaid.

Sun, 02/03/2013 - 10:02 | 3210737 Inthemix96
Inthemix96's picture

And here listen to this.

Just been informed that the "Iron" lady thatcher, when she shuffles off this mortal coil will recieve a "State" funeral.  With what is coming out in press here, and with what is being suppresed by the government and police forces across this green and pleasant land with regards to the sheer amount of people in high up places concerning peodophilia this is astonishing.

Thatchers government had fucking peodophiles from top to bottom and they were and are being protected, she hosted the serial nonce jimmy saville at our expense for 11 consecutive years at christmas and they are going to give the filthy peodophile protectorate cunt a "State" funeral?

And we wonder why the world is fucked folk?  We should hang our collective heads in shame at what we allow in our name.

Sorry for the thread jack though, I cannot fucking believe it??

Sun, 02/03/2013 - 10:19 | 3210753 The Count
The Count's picture

There is a section of the top elite that is totally morally sick and corrupt. Pedophilia, Satanism, etc. Of course everything is done to prevent any of these facts ever coming to light. Just read all that has been published on Doutroux case in Belgium. There have been over 20 homicides with people connected to this case, including policemen shot at their precinct!



Sun, 02/03/2013 - 10:31 | 3210772 Inthemix96
Inthemix96's picture

Depravity runs deep here it seems count.

This is beyond the pale whats being uncovered here.  Never mind state fucking funerals, these filthy swines should be hanging from fucking trees, each and every one of them.

Sun, 02/03/2013 - 13:13 | 3211049 magpie
magpie's picture

Nasty story, one can tell by the direction the revelations go which type of faction has the upper hand in the UK for the moment.

Sun, 02/03/2013 - 13:17 | 3211057 reload
reload's picture

The only politicians deserving of state funerals, are politicians who have just had public execution.

We could get Simon Cowell to organise the whole thing into a televised game show. The eXecution factor.

"sorry Gordon, not enough phone votes tonight, the executioner awaits"

but how to execute him? "let the public decide" with another phone in and once decided, hanging, beheading with Axe, Guilotine etc or electrocution, The rights to actualy be the executioner could be auctioned live on the internet. Think of the viewing figures, think of the revenue.

And then to keep the suspence going

"And next week on the chopping block we have George Osbourne and Tony Blair - which one survives? tune in to find out" - Cammera pans to dungeon full off manacled politicians awaiting their fate.

I think it would be popular, lift the public mood and raise significant revenue to pay off the debts these fools have run up in our names.

The funeral part could take place after the post execution commercial break, again with the public making donations to the defecit in return for the right to piss on the open grave of the politician.

The only downside is that the smug Cowell would get even richer, but it would be a worthwhile trade off.

Sun, 02/03/2013 - 10:12 | 3210747 The Count
The Count's picture

I think there is a good reason Jesus kicked out the money changers in front of the tempel 2000 years ago. Present day, same menace. They are an infestation that needs to be removed.

Sun, 02/03/2013 - 10:13 | 3210750 alfred b.
alfred b.'s picture


      What else is to be expected from a tax-payor sponsored and bankster-managed government!!!

  The crooks are nesting in Washington!



Sun, 02/03/2013 - 12:08 | 3210751 blindman
blindman's picture

"...On that day each of these factors conspired together and Kyle hit the man before he attacked the convoy. “God blew that bullet and hit him,” he told The Post."

Read more:
some wars appear to be about saving your ass and some are about
preserving "a way of life", there are defenders and aggressors and there
is rhetoric and rationalisation and then there is always god doing
the heavy lifting. same in finance, the unspeakable and creative stuff
is chalked up to doing god's work or giving god an assist.
god doesn't recognize the authority of the Geneva conventions or
regulation in general anymore and neither do his agents. insane and inspired
must be the way forward? or backward. is it that trade and business, diplomacy
and peace are just impossible in the domain of the global fiat money system and
we are reduced to mindless animals to strictly comply with the demands of
the designed failure of it, the crooked imbalances of human sacrifice and
mandatory cliff diving? beats me.

Sun, 02/03/2013 - 10:43 | 3210784 blindman
blindman's picture

Only One Solution to the Fed Debt Trap
by Rand Clifford

The Oxford Dictionary of Proverbs lists the oldest written version of the saying “what you don’t know can’t hurt you” as coming from playwright George Pettie’s Petit Palace in 1576:
“So long as I know it not, it hurteth me not.”
Several Rothschild-controlled centuries later, what Americans don’t know about “the Fed” may be fatal.

The Fed gained control of America’s money in 1913. Government debt now soars toward $17 trillion. Interest paid to service this debt, for the year 2011 alone, was $454,393,280,417.03, largely funneled by the Fed to eight international banking families:

Rothschild’s of London and Berlin; Lazard Brothers of Paris; Israel Moses Seaf of Italy; Kuhn, Loeb & Co. of Germany and New York; Warburg & Company of Hamburg, Germany; Lehman Brothers of New York; Goldman, Sachs of New York; Rockefeller Brothers of New York.
Ever heard a better argument for entitlement reform?

Rothschild wealth alone is estimated at $500 trillion.

Keeping the America public ignorant of why debt crises and threatened government shutdowns are a semi-automatic ruse aimed at social programs; reinforcing that cherished ignorance is a vital function of mainstream corporate media (MSM). Prevailing “see no evil, hear no evil, speak no evil” public attitudes toward the Fed are boosted by the trouble decent people have even imagining such an epic crime…there must be a law! Then, there’s faith…I really want to believe the Fed is part of the federal government.

No matter how many times former Fed Chairman Alan Greenspan and others remind us that the Fed is an untouchable independent agency, people like to believe what they want to believe, regardless.

An image problem with our country’s first two Rothschild-controlled central banks was transparency of the name, “U.S. Central bank”, or “BUS” (Bank of the United States).

Our current “Federal Reserve System”…now there’s a name with enough mojo to span a century, and even juice Congress into re-chartering the Fed for another 100 years (to 2113). MSM went totally mild.

In terms of persona, the Fed is Bela Lugosi. Spooky, deadly-secretive, omniscient, riveting…the Fed sounds like part of the federal government, sounds backed with reserves…a “system” instead of a bank—all a fiendishly-charming triple play. When the Fed walks into the room, heads turn. When the Fed controls a superpower’s money, heads roll.

Dollars From Thin Air

A dominant way to bank dollars from thin air is the Federal Reserve System’s entitlement.
" ...
"... We should have paid attention to Louis McFadden:

“The Federal Reserve (banks) are one of the most corrupt institutions the world has ever seen. There is not a man within the sound of my voice who does not know that this Nation is run by the International Bankers.”


“Some people think the Federal Reserve Banks are the United States government’s institutions. They are not government institutions. They are private credit monopolies which prey upon the people of the United States for the benefit of themselves and their foreign swindlers” (Congressional Record 12595-12603 — Louis T. McFadden, Chairman of the Committee on Banking and Currency June 10, 1932).

Or Lindbergh:

“The financial system has been turned over to the Federal Reserve Board. That Board as ministers the finance system by authority of a purely profiteering group. The system is Private, conducted for the sole purpose of obtaining the greatest possible profits from the use of other people’s money.” (Charles A. Lindbergh Sr., 1923)

Sun, 02/03/2013 - 11:12 | 3210810 Woodrox
Woodrox's picture;range=2011...

chart of yen to 20 year treas bond to euro, notice yen since Nov 19.

Sun, 02/03/2013 - 12:03 | 3210872 blindman
blindman's picture

"..Prominent Americans have long pointed out that the Fed is a private banking cartel designed to systematically destroy the dollar, drain wealth of the American public and crush the federal government with debt.

Ben Bernanke, current chairman of the Fed, actually told truth about the Great Depression in his speech at a University of Chicago conference honoring the 90th birthday of Milton Friedman, concluding with:

“Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression. You’re right, we did it. We’re very sorry. But thanks to you, we won’t do it again.”

MSM excels at suppressing leaked documents and defector testimony that clearly reveal the Fed’s zeal over the thousands of banks and farms they hoped to acquire for pennies on the dollar by inducing a depression. MSM has also protected the public from the truth that derivatives were at the heart of the 2008 financial crisis, and will define the next crisis.

Estimates of the notional value of the global derivatives market range from $600 trillion to $1.4 quadrillion. Webster Tarpley said this about derivatives:

“Far from being some arcane or marginal activity, financial derivatives have come to represent the principal business of the financier oligarchy in Wall Street, the City of London, Frankfurt, and other money centers. A concerted effort has been made by politicians and the news media to hide and camouflage the central role played by derivative speculation in the economic disasters of recent years. Journalists and public relations types have done everything possible to avoid even mentioning derivatives, coining phrases like “toxic assets,” “exotic instruments,” and – most notably – “troubled assets,” as in Troubled Assets Relief Program or TARP, aka the monstrous $800 billion bailout of Wall Street speculators which was enacted in October 2008….”

With their ownership of MSM, and history of doing whatever they want—including whatever it takes to protect their dollar entitlement, the Fed might seem impossible to root out. And regardless of how severely they try to complicate the whole Fed crime, our choice is exquisitely simple:

Kill the Fed or the Fed will kill us." ...

Sun, 02/03/2013 - 12:28 | 3210927 AvoidingTaxation
AvoidingTaxation's picture

I'm Jack complete lack of surprise

Sun, 02/03/2013 - 12:40 | 3210968 blindman
blindman's picture

Mali, Hagel – and the Rothschilds
" by Dean Henderson
On Wednesday, as if to send a message to the US Senate Armed Services Committee, Israel bombed a convoy on the Syria/Lebanon border.

It seems to have worked. Yesterday morning, chicken hawks on that committee with names like McCain and Inhofe were busy grilling Obama Defense Secretary Nominee Sen. Chuck Hagel (R-NE) as to his unflagging allegiance to mother Israel and the military-industrial complex alike.

Meanwhile, the Rothschild-led City of London Illuminati banksters who run the dog and pony show, otherwise known as Israel, seek to grab more global resources – this time in the north African country of Mali.
" ....

Sun, 02/03/2013 - 12:45 | 3210982 Atlas Crapped
Atlas Crapped's picture

There is no Europe, there is no US of A. This is a bailout of the international monetary and financial system. Fiat has NO borders.

Sun, 02/03/2013 - 13:47 | 3211126 ebworthen
ebworthen's picture

Paul Krugman on "This Week" with George Stephanopolous.

He sat there and tried to say something intelligent, which is nearly impossible for the bearded potato unless it is the happenstance of accidentally stringing the right nouns and verbs together.

He looked like a child.  That man has no brain.

Beyond Krugman's abject stupidity, watching people talk about trying to solve the demise of the U.S.A. is just sad - none of them get it.

But, Krugman's little soft lips trying to articulate vapid thoughts from a starch filled brain was just horrifying.

Sun, 02/03/2013 - 14:45 | 3211263 Orly
Orly's picture

Awesome, awesome article.  At least someone has the huevos to get to the truth.

Keep digging, Tyler!

Much appreciated.


Sun, 02/03/2013 - 14:52 | 3211286 hooligan2009
hooligan2009's picture

ugh...anyone else getting the page hijacked by google for ten seconds for adverts before the real page loads?

Sun, 02/03/2013 - 14:53 | 3211294 blindman
blindman's picture

sometimes, you might run ccleaner and avast anti-virus.
might help if it gets intolerable.

Sun, 02/03/2013 - 17:20 | 3211649 hooligan2009
hooligan2009's picture


Sun, 02/03/2013 - 15:18 | 3211351 Lord Of Finance
Lord Of Finance's picture

I can hear the wailing and gnashing of teeth of the keynesian neo-marxists after articles exposing them such as this one. 

   If you listen closely. Turn off the boob tube and the 'you tube'. You will be able to hear them screaming in absolute rage, over and over again, "DAMM YOU ZERO HEDGE!!"

Sun, 02/03/2013 - 17:11 | 3211637 dragoneyes74
dragoneyes74's picture

This article is stunning.  Is there a way to track the money further?  It certaintly appears that it is correlated with the rise in the EUR/USD (and stocks), but I imagine a lot of it, and the purpose of it, was to allow the foreign banks to buy up the gov't bonds of the failing Euro countries (as your title implies).  But it would be nice to see the increase in bond holdings, or whatever the increase is, if that information is available publicly.   This is a further explanation (along with your deposits over loans article) of why we haven't seen the degree of inflation that should accompany the QE programs.  You have to give Bernanke some kind of evil credit for being creative in extending this charade.  Here's a way for him to monetize both the US and European governments without the immediate effect of inflation because the excess dollars are spreading out to the world.  In theory, as long as the debt ceiling keeps getting raised and we keep running huge deficits this game could go for awhile still.  I would think the main limit on Bernanke is the price of the dollar and the Euro.  If the Euro goes too high it will stifle their exports; if the dollar goes too low it could snowball pretty quickly as the big money of the world dumps their US bonds and dollars, which will cause the US gov't debt service costs to completely consume the budget, which seems like the built-in mechanism that will end the game.  Much like the mortgage bubble had the built-in mechanism of people eventually defaulting on loans they couldn't afford, the gov't bond bubble will pop when interest rates consume the GDP-propping spending.  While there will be the inevitable pullbacks in the dollar (possibly one soon), the key to timing the collapse might watching the EUR/USD near its highs (hopefully getting there).  (Not counting the potential of a political debt ceiling debacle and/or a real threat of sovereign default in Japan or Europe happening first, or the temporary reversal of the EUR/USD if Draghi lowers rates further.)  If I was Bernanke and Draghi, my plan would be to push the EUR/USD to the highs of 2011, then slow it down and reverse the process like 2012, then repeat until it all falls apart.  While stocks and the EUR/USD seem near a short-term pullback, with so much room for the Euro and dollar to run, and so many dollars being pumped in, stocks could have more upside than we would think.  

Sun, 02/03/2013 - 20:22 | 3211993 jonjon831983
jonjon831983's picture

"We urge readers to check the weekly status of the H.8 when it comes out every Friday night, and specifically line item 25 on page 18, as we have a sinking feeling that as the Fed creates $85 billion in reserves every month to offset its other key task - the ongoing monetization of the US deficit, it will do just one thing: hand the cash right over straight to still hopelessly insolvent European banks to push the EURUSD higher, until, as in the summer of 2011 it goes far too high, crushes German, and any other net European exports, and precipitates yet another wholesale bailout of Europe by the global central bankers. Just as the Fed did in 2011."


What was the EURUSD danger point in 2011?

Sun, 02/03/2013 - 22:30 | 3212229 chindit13
chindit13's picture

Simply outstanding piece of work.  This certainly seems to be the smoking bazooka.  With each argument I tried to think of an alternative explanation, and your next section addressed it before I could finish forming the thought.  Damn, if you ever wanted to be "talent" on an increasingly obscure and irrelevant financial channel, I know one that would do well to distance itself from its current Fed "Expert" and bring you on board.  Apparently, however, the position requires a degree in journalism rather than math or finance.  Perhaps you could (Steve) lie(sman) on your resume or get a (Becky)quickie at the University of Phoenix?

Sun, 02/03/2013 - 23:08 | 3212357 chindit13
chindit13's picture

I'll add that it seems Germany has decided that it fears hyperinflation caused by currency proliferation more than it fears recession (a wise choice, by the way), as it appears to favor this Fed (double French) backdoor bailout rather than have Draghi do the heavy printing.  As the article says, we'll see how long this sentiment lasts when even the entry-level VW is no longer price competitive with a Lexus or Lincoln.

I can't imagine how bad DB's admittedly 40:1 levered balance sheet really looks.

Mon, 02/04/2013 - 00:20 | 3212520 Mr. Magoo
Mr. Magoo's picture

After watching this clusterfuck for years i am also convinced that these shadow offshore vampire leeches will continue this facade as long as they are able to manipulate all aspects of the so-called free market, they are in control. All we can do is live, watch and wait and when the bottom drops out only the ones with resolve will survive.

Mon, 02/04/2013 - 15:45 | 3214099 Herkimer Jerkimer
Herkimer Jerkimer's picture

I missed putting this in last week, but better late'n never.


I predict!


As I have with other shenanigans, like the silencing of the ratings companies, that in the future, as a water mark of where we are going in this world and specifically, the finance world, that the fed will cut off such information, so that organizations like ZeroHedge will not be able to out them in the manner that they do.

Pray I'm wrong.


Laugh if I wrong. Cry if I'm right.

You heard it here first.


Do NOT follow this link or you will be banned from the site!